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Italy approves plan to pay €40B to settle a giant outstanding balance with private...

Italy approves plan to pay €40B to settle a giant outstanding balance with private companies. The debts became a source of distress for the country's corporate sector when bank credit to businesses dried up. The government hopes paying its bills will stimulate the economy, but says the decision to make good on its commitments wasn't easy: "We have to follow a path between helping our economy recover and maintaining budget discipline," Italy's Economic Minister notes.
Comments (7)
  • phxcrane
    , contributor
    Comments (415) | Send Message
     
    If got this right. Italy owes the money but acts like there doing private business a favor to pay it. sounds like the state of IL.
    6 Apr 2013, 08:43 PM Reply Like
  • JeffreyLangBoyd
    , contributor
    Comments (645) | Send Message
     
    It has been a few years since I've been involved with operations in Europe but payment terms in southern Europe can literally be 180 days or more. Pulling in payment terms across the board would make the conduct of business more efficient.

     

    Of course, if it is selective, it just makes crony capitalism more profitable.
    6 Apr 2013, 10:17 PM Reply Like
  • Angel Martin
    , contributor
    Comments (1291) | Send Message
     
    ok, so gov't not paying vendors doesn't count against EU deficit rules?

     

    what kind of "austerity" is that ?

     

    of course, Spain and Greece (and probably most of the others) have been doing the same for several years
    http://on.wsj.com/12tGzTW
    http://bit.ly/10EoZrb

     

    hey, if the ECB finally decides to do something to help SME financing, maybe they can extend credit to small and medium enterprises that have unpaid bills from governments...
    6 Apr 2013, 08:49 PM Reply Like
  • justaminute
    , contributor
    Comments (581) | Send Message
     
    "The government hopes paying its bills will stimulate the economy"

     

    lol
    Since they can't print euros, they have to take 40 billion from someone else to give to someone else. A net zero.
    6 Apr 2013, 08:53 PM Reply Like
  • Michael Nau
    , contributor
    Comments (972) | Send Message
     
    Italy should leave the Euro before its economy completely crumbles. It sounds weird saying this, but when a candy bar cost $2 million lira, Italy's economy seemed much better off. They just can't compete with Germany.
    7 Apr 2013, 11:13 PM Reply Like
  • justaminute
    , contributor
    Comments (581) | Send Message
     
    So running away will make them compete better?
    8 Apr 2013, 12:40 AM Reply Like
  • JeffreyLangBoyd
    , contributor
    Comments (645) | Send Message
     
    Basically, devaluation is a tax that doesn't require a vote from politicians but at least it allows prices to adjust. Rather than cutting pensions, you simply make them worth less by making it so they can't buy as much. Rather than imposing a tax on savings accounts or wealth you simply make them worth less by paying back with devalued currency.

     

    It would make it easier for them to compete internationally if inflation didn't get too out of control. Of course, most people would be poorer because of all the indriect taxation taking place.
    8 Apr 2013, 10:59 AM Reply Like
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